PRINCIPLES OF TRANSPORTATIONS
Aloshy P Sojan
M Com, MIB
S3, Roll No. 6031
Mar Athanasius College (Autonomous)
Transportation
Transportation as a component of physical distribution is concerned with the movement of goods from the ware house to customer destination.It includes loading and unloading of goods and their movement from one place to another.
Economy of scale
It refers to the characteristic that transportation cost per unit of weight decreases when the size of the shipment increases. It is common knowledge that larger the capacity of the transport vehicle more goods can be transported at a time which will decrease the cost per unit of transport.
A transportation economy of scale exists because fixed expenses such as administrative costs, invoicing costs, equipment costs associated with moving goods and materials get spread over the entire weight of the load. This will help to decrease cost per unit of the goods transported.
E.g.: Suppose the cost to administer a shipment is Rs. 10.00. Then for a 10 Kgs shipment the cost of transporting per unit of the product becomes Re.1.00, while for a 1,000 Kgs shipment the cost of transporting per unit of the product Re.0.01. Thus, it can be said that an economy of scale exists for the 1000 Kgs shipment.
Economy of distance
It refers to the characteristic that transportation cost per unit of distance decreases as distance increases. Transportation economy of distance is also referred to as a tapering principle since rates or charges taper (decrease) with distance. The rationale of economies of distance is similar to that for economies of scale. Longer distances allow the fixed expenses to be spread over more miles, resulting in lower overall per mile charge.
Transportation Infrastructure
In the movement of product from place of origin to the place of consumption, transportation is an important component of logistics system. Transportation serves two purposes i.e.,
1. product movement
2. product in transit storage.
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